Suppose an Economy Experiences a Permanent Increase in Its Expected

question 66

Multiple Choice

Suppose an economy experiences a permanent increase in its expected inflation rate. As a result, there is

• A) a downward shift of the short-run Phillips curve.
• B) a downward movement along the short-run Phillips curve.
• C) no change at all to the short-run Phillips curve.
• D) an upward movement along the short-run Phillips curve.
• E) an upward shift of the short-run Phillips curve.

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Definitions:

Dividend Capture

An investment strategy aimed at buying stocks before the ex-dividend date and selling them shortly after, to collect dividend payouts.

Lockboxes

Banking service that speeds up collection of payments by having those payments mailed directly to a location accessible by the bank, reducing processing time.

Seasonal Fluctuations

Variations in sales, inventory levels, or business activity that regularly occur at certain times of the year due to seasons.

Corporate Bonds

Debt securities issued by corporations to fund capital improvements, expansions, or other business needs.